CLSA maintains giant network weaker than market rating

Sina Science and technology news Beijing time of August 7, the CLSA released its investment report today, maintaining the giant network stock (NYSE:GA) "weaker than the big market" rating, the target price from 7.7 U.S. dollars to 8.1 dollars.

The following is a summary of the contents of the report:

The Giants network's second-quarter results exceeded Wall Street's expectations, but revenue forecasts for the third quarter are disappointing. The traditional game "journey" tends to mature, the second quarter revenue or year-on-year decline of 20%. The new game being developed by the Giants network looks bleak compared with rivals. We will reduce the giant network in 2013 and 2014 per share of diluted earnings forecasts are cut by 2% and 6% respectively.

Second quarter results: The second fiscal quarter revenue for the 588 million yuan, the year-on-year growth of 11%, the chain growth of 3%. Operating profit margin of 358 million yuan, an increase of 9%, the chain fell 1%. Operating profit margin of 61%, the chain fell 2%. We expect operating margins to decline by 5% in the third quarter. Net profit of 383 million yuan, an increase of 11%. Diluted earnings per share of $0.25 trillion, above Wall Street's expected $0.23 trillion.

Third-quarter results expected: Giant network third-quarter revenue forecast relative downturn, the chain flat or slightly increased. Wall Street, by contrast, is expected to grow at least 5% a quarter. "Journey" tends to mature, the second quarter of the revenue may fall 21% Year-on-year, the chain down 7%. Currently, the game still contributes 38% of total revenue. July, the giant network for the "Journey" released a film, but there is no short-term rebound in the signs. In contrast, the new game "Fairy World" performance is good, but not enough to make up for the downturn of traditional games.

The new game is bleak: The new game that giant networks will launch next year is not very exciting. The giant network recently announced that it has obtained authorization from South Korean developer Wemade for the MMO Game "Heaven 2". The first version of the game was awarded a grand game in 2008, but not a success. Giant Network also has three independent research and development of MMO games, but did not disclose too much relevant content. In the second half of this year, the giant network will also launch two web games and several mobile games. As PC game developers need to adapt to new forms of game development, these web games and mobile excellence are less likely to be blockbuster games.

Valuation: We continue to maintain the "weaker-than-market" rating of the giant's online stock, bringing the target share price from $7.7 trillion to $8.1. (Li Ming)